US oil and gas companies ramp up production as prices soar

Some of the world's largest oil and gas producers have vowed to boost their crude production to help stabilize prices as the price at the pump continues to surge nationwide.

According to Politico, both Exxon Mobil and Chevron are boosting oil production at the Permian Basin field in West Texas and New Mexico. Although this strategy was laid out last year, a new urgency has emerged due to the surge in oil prices reaching a 14-year high.

Overnight, US crude oil prices reportedly jumped more than $10 to $130 per barrel as companies anticipated a US ban on Russian oil imports, though according to Politico, these prices later backed down during Monday trading.

That surge in prices has driven gasoline prices at the pump up nearly 50 cents in the past week, reaching a national average of $4.06 a gallon, according to fuel price service GasBuddy.

"Exxon has said it expected to increase its production from the Permian by 100,000 barrels per day this year, on top of a sharp ramp up last year to 460,000 barrels per day," Politico reported.

"We're well on our way to that," CEO Darren Woods told an industry conference in Houston on Monday.

Chevron has also vowed to increase production by 60,000 barrels per day this year at the same site.

During the early days of the pandemic, US oil production plummeted, forcing companies into bankruptcy and others to cut costs and shut down new drilling.

Since August of 2020 though, the industry has swung back to life, bringing in 2 million barrels per day to reach 11.6 million barrels per day by late February, with forecasters expecting that to climb by another 1 million barrels by the end of the 2022.

In attempts to bridge oil shortfalls, the Biden administration is reportedly reaching out to Saudi Arabia, the world's leading exporter of crude oil, in addition to Venezuela, whose government has been sanctioned as well.

Executives say though that the high international prices have already pushed producers to boost.

"There's a mirage that spare capacity can be brought out," said Tengku Muhammad Taufik, CEO of the Malaysian state-run oil company Petronas.

James Burkhard, head of oil markets for IHS Markit, said that the Biden administration is potentially looking for the backing of OPEC, whose members would need to boost their output if countries were to attempt to ban Russian oil.

"It is likely that there is the capacity for this, and OPEC might find themselves inclined to back the step if the US can provide the right incentives," he said.

Former US ambassador to Ukraine and current senior vice president for global energy at IHS Markit Carlos Pascual said that the international efforts to punish Putin and Moscow is in its early stages.

"The global impacts on markets will continue," he said. "I don't think it's going to be over in a few months — potentially years."

The White House announced last week that it would be releasing 30 million barrels of oil from the US' Strategic Petroleum Reserve, but the move has reportedly made little difference in the price market.

John Hess, CEO of oil and gas producer Hess Corp, said the announcement, which came as part of an international disbursement of 60 million barrels, was too modest to affect the market.

According to Politico, the amount released by the Biden administration would only cover around 1.5 days of US consumption.

The Energy Department and the International Energy Agency need to release "120 million barrels out of the strategic reserves in the world and another 120 million next month and say more is coming," he said. "They need to do it now, and they need to get ahead of it."

He added that his company has increased spending on new oil wells, much of which was directed towards the Bakken field in North Dakota.

"[Companies] are going to have to increase levels because people need oil," he said.